DI Can Protect Your Client’s Paycheck — and Increase Yours Selling DI to the Corporate Client Branden Pierson, Unum Keith Hoffman, NFP Kat Freeman, NFP Presented By:
Jan 10, 2016
DI Can Protect Your Client’s Paycheck — and Increase Yours Selling DI to the Corporate Client
Branden Pierson, UnumKeith Hoffman, NFP
Kat Freeman, NFP
Presented By:
INTERNAL USE ONLY. Not for public distribution.
Agenda
• Disability Insurance Awareness Month Campaign• Multi-Life Disability 101• DI Sales Ideas• NFP DI Resources
INTERNAL USE ONLY. Not for public distribution. 2012 NFP SCHOOL OF EXCELLENCE
INTERNAL USE ONLY. Not for public distribution. 2012 NFP SCHOOL OF EXCELLENCE
Disability Insurance Awareness Month
http://go.nfp.com/diam
Top 5 Reasons to Sell Individual Disability Insurance
1 It’s a great door opener.
2Upon a disability, it helps your clients pay daily living expenses and bills, including premiums on other insurance products they have with you.
3 It helps you diversify your portfolio offering and provides attractive compensation.
4 It’s part of your due diligence.
5 Solutions are available in sought-after markets – business owners and higher-income individuals.
Multi-Life Disability 101
7
Industry Snapshot:Multi-Life Sales Trends – “Back in Black”
Unum Growth Drivers:
1.Large New Case Saleso Industry Diversificationo 1/3 ER Paid, 2/3 Voluntaryo Pent up demand from 09/10?
2.Inforce block yield improvement but not pre-recession level. “New Normal?”
o Up sell on inforce block GSI Tier 2 Expansions
o New hires, earnings increases
The Great Recession Impacts to Multi-Life: Unum’s Experience • Inforce Block Yield drop due to unemployment / earnings decreases• New large case sales: Executive comp scrutiny / “Cuts not benefit adds”• ER paid plan persistency drop / EE pay persistency fairly stable• Stayed the course: small/mid new case sales
UNUM = +33% GrowthW/O Unum = 7.5% Growth
8
Multi-life IDI leadership
26%
penetration3
Unum has 16,406 inforcemulti-life IDI customers2
18%
penetration4
1 LIMRA, “2010 U.S. Individual Disability Income Inforce Total Multi-life,” 2011. 2 Unum IDI Database as of December 31, 2010. 3,4 Unum IDI Database as of March 31, 2011.
CompanyTotal multi-life
IDI inforce premium1
Unum $565,505,130
Carrier 2 228,512,805
Carrier 3 146,181,326
Carrier 4 97,032,502
Carrier 5 83,216,756
Opportunity!
9
Multi-life IDI leadership – Full Year 2011
CompanyTotal multi-life IDI
sales premium* YOY Change Market Share
Unum $50,381,056 33% 32%
Carrier 2 26,149,811 9% 17%
Carrier 3 21,819,162 20% 14%
Carrier 4 13,164,422 -21% 8%
Carrier 5 11,979,675 15% 8%
Carrier 6 11,741,520 22% 8%
Carrier 7 10,533,608 -2% 7%
Carrier 8 8,576,080 20% 6%
Carrier 9 704,518 -10% 0%
Carrier 10 367,929 26% 0%
Carrier 11 70,536 390% 0%
Carrier 12 18,611 -37% 0%
Total $155,506,928 15%
*LIMRA, “2011 U.S. Total Multi-life IDI Income Issues,” 2011.
1010
The ER sponsored multi-life market• Penetration: 30% of Fortune 1000 has ER sponsored IDI
Unum’s Focus on the ER Sponsored Multi-life Market• 99.5% of Sales are in the ER Sponsored ML segment
• 85% of our sales are Guaranteed Standard Issue
New variables that are expanding the ER sponsored market
• Innovation: Communication, Education, Enrollment for Multi-life
• Distribution: Revenue growth and diversification for benefit producers
• Evolution: Products and Uwing that are more user-friendly than the past
10
The ER Sponsored Multi-Life Market
11
Unum Multi-Life IDI:New Case Industry Trends
Financial Services, 24%
Healthcare Services, 22%
Manufacturing, 13%
Business Services**, 10%
Other Services, 10%
Legal Services, 8%
Business Consulting*, 8%
Engineering & Management,
Environmental, 5%
2011
Notable Trends:• Health Care Services driven healthcare reform physician plans• Financial services increase• Law firms retooling/upgrading existing plans vs. new plans
12
Most employers and employees do not know their current exposure
Supplemental disability is one of the most popular voluntary products among employers
Diversification and growth(vested revenue)
Keeps other brokers out
• Solves problems• Strengthens the
relationship
Why Supplemental Multilife Disability for Brokers?
RevenueRevenue
On the minds of employersOn the minds of employers
Customer persistencyCustomer persistency
Insulation from competitorsInsulation from competitors
Need for educationNeed for education
13
Why invest your time ?
Revenue Growth from within………..
Assumptions*: Produce $65,000 of premium year 1, then 10% growth years 2-10
Multi-Life IDI compensation is 100% Vested
* Business Mix can increase or decrease the above
Total RevenueRecurring Revenue
YTD Revenue
Year 1 $37,000
Year 5 $98,000 $44,000 $332,000
Year 10 $194,000 $106,000 $1,085,000
14
Vested Compensation 10 Year View
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
An
nu
al C
om
pen
sati
on
1 2 3 4 5 6 7 8 9 10Year
Broker Name: Joe Revenue
Inforce Bonus
Add'l Renewal
Renewal Base
FY Bonus
First Year Base
Proposed Sales: $65,000
Annual Growth: 10.0%
Persistency: 90.0%
Total 10 Year Comp: $1,084,973
Renewal Stream: $106,504
Note: All projections and results are estimates for illustrative purposes only and are not to be construed as a contract between you and the subsidiaries of Unum Group. Actual payments due to you are governed by your broker contract and compensation schedules. The subsidiaries of Unum Group reserve the right to alter the compensation program at any time, subject to contract limitations
Building the Renewal Stream
15
Objective
Utilize group and individual product platforms to create a more effective integrated disability insurance program
Integrated Group and Individual DisabilityCoverage
Group Long Term Disability
• Economies of Scale, ER owned
• Designed for masses• Variable rate structure
Individual Disability Income (IDI)
• Individually owned, provided through ER
• Value added, customized• Pooled, level-rate structure
16
Supplemental Multi-life Income Protection Evaluation
SHORTFALLS & GAPS - (Exposing the employee need)
Benefit maximumsTaxability of benefits All size
Appeals
To
EE/ER
VALUE OF OFFERINGBenefit educationEnrollment and communicationBenefit features
- Portable/LTC/CAT
ER Sponsored Leverage (Discount / GSI Uwing)
Retain and attract Customization
RISK TRANSFER - (Employer risk diversification)
Reduce plan exposure and experience volatility
COST SHIFT / PLAN AND FUNDING REDESIGN
Large case: Medium to high
credibility
Uninsured earnings - Incentive (Bonus, Commission)- Deferred comp, RSU, Retirement
Information Needs: LTD Plan, Total Comp Census, Plan Experience
Appeals
To
EE/ER
Appeals
To
ER
All size
SizeSegment
17
Concern: Income replacement shortfall due to benefit maximum
Shortfall & gap illustratedAssume 60% to $15,000 LTD plan
Why Multi-Life IDI? Need
LTD Plan Max
Employee Population
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
25 30 35 40 45 50 55 60 65 70
Age
Earn
ing
s
Above LTD Plan Maximum Below LTD Plan Maximum
18
Shortfall & gap illustrated
Assume 60% to 15K LTD plan
*Tax assumption − 28%
Why Multi-Life IDI? Need
SalaryBonus/
CommissionTotal Income
Group LTD Benefit
Total Income Replacement
Total Income Replacement
after Tax*
$100,000 $25,000 $125,000 $ 6,250 60% 43%
150,000 37,500 187,500 9,375 60% 43%
200,000 50,000 250,000 12,500 60% 43%
250,000 62,500 312,500 15,000 58% 41%
300,000 75,000 375,000 15,000 48% 35%
350,000 87,500 437,500 15,000 41% 30%
This column represents the NET after-tax income
replacement.
19
Income replacement by taxability of benefits
If LTD and IDI are both non-taxable (generally employee-paid), the total replacement is limited to 60%
If LTD and IDI are both taxable (generally employer-paid), total replacement can be up to 75%
If LTD is taxable and IDI is non-taxable (generally employee-paid), 75% replacement applies for the majority of cases.• This may be lower if non-taxable benefit outweighs the taxable benefit on a
dollar basis.
LTD IDI Total replacement
Non-taxable Non-taxable 60%
Taxable Taxable 75%
Taxable Non-taxable 70%-75%
20
Guaranteed exchange for long term care policy (optional for 675 and 750 products)
•$3000 per month•Home care benefits•6-year benefit period•Between ages 60–70
Group LTD + IDI: Buy-up
Cost-effective disability coverage that supplements LTD income protection
180 Days Age 65
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Time line
Catastrophic disability
25% to a monthly maximum of $10,000
IDI 75%, less group LTD, to a monthly maximum of $XX,000
GroupLTD
60% to a monthly maximum of $XX,000
Wage c
on
tinu
ati
on o
r STD
21
Guaranteed exchange for long term care policy (optional for 675 and 750 products)
•$3000/month•Home care benefits•6-year benefit period•Between ages 60–70
Group LTD + IDI: Combination plan
Combines cost-effective group LTD with the non-cancellable feature of IDI to provide executives with comprehensive coverage
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Catastrophic disability
40% to $10,000 monthly maximum
IDI 10% to a monthly maximum of $XX,000
GroupLTD
50% to a maximum monthly benefit of $XX,000
180 Days Age 65Time line
Wage c
on
tinu
ati
on o
r STD
22
Ideal factors for GSI plans
Employer-paid & 100%
Higher Earnings
● Five or more employees earning $75,000 or more
Income Replacement shortfalls• 60% or lower replacement ratio
• A cap of $10,000 or less on incomes that call for higher amounts
Risk transfer● Greater than a 60% replacement ratio
● LTD maximums greater than $15,000
Defined group/carve out − white collar executives
Basic Monthly Earnings (BME) that excludes variable compensation
Employee-paid plans 50 or more employees earning $75,000 or more
20% participation or a minimum of 10 lives, whichever is greater
23
Cannot be cancelled and contract cannot be changed
Level premiums to age 65 (option to age 67 for Income Series 750)
Individual ownership of policies – portable
No offsets with workers’ compensation, social security or other government programs
Multi-life discounted rate structure
Highlight features of multi-life IDI
Return-to-work features: Recovery and work incentive benefit
Long term care exchange offers an asset protection feature (optional rider for Income Series 675/750)
Catastrophic disability benefit for more severe disabilities (optional)
24
Enrollment support at every step
A successful enrollment begins with:
Full support from the employer and the Human Resources department
An installation call before the enrollment – with the employer, implementation manager and enrollment manager
Successful strategy execution based on employee demographics and industry
Multiple contacts with employees and variedenrollment options to accommodate unique needs
25
Steps to a successful enrollment
• Informational website
• Live informational sessions via the web
• Q&A for web and paper enrollments
• Inbound and outbound calls
Educate
• Voice Signature Authorization (VSA) (paperless enrollment)
• Self-enrollment via the web
• Face-to-face enrollment
EnrollCommunicate
• Endorsement letter
• Announcement communications
• E-mail reminders
• Personalized paper kits
26
Enrollment methods and tools
PaperIndividualized kits provide personalized information and all forms necessary to enroll. Supports specialized programs and customer requests.•Assessment of need•Personalized rates•Endorsement letter from employer •Policy information•Toll-free number for assistance during enrollment staffed by licensed enrollment specialists
Web plane.biz link e-mailed from Unum or provided on employer site.•Toll-free number for assistance during enrollment staffed by licensed enrollment specialists •Secure site protects employee privacy•Real-time tracking throughout enrollment•Can also include modified paper kit delivered to employee
Phone Employees speak with enrollment specialists to choose a plan and enroll via Voice Signature Authorization (VSA) technology.
• Educational website or paper kits supply detailed plan information
• Implemented as part of paper or web-based enrollment strategy
• Instant enrollment with the assistance of licensed enrollment specialists
2727
Value Story - Unum’s Disability Claims Model
Our guiding principle is to provide a fair, thorough and objective review of all claims.
We do this by adhering to the highest standards built on:
Highly skilled people
A customer-focused process
Protection for customers when they need us most
INTERNAL USE ONLY. Not for public distribution.
Q & A
INTERNAL USE ONLY. Not for public distribution.
Tips on How to Sell DI
Say “Paycheck Protection.” Don’t tell me what it is. Tell me what it does! Most people cannot envision being disabled but they can understand the importance of protecting the paycheck – their most important asset. Change your client’s perspective by using one key phrase - paycheck protection.
Sell the Need for Disability Insurance with a Personal Story.
Sell Disability Insurance to Business Owners. There are many good candidates for DI, but business owners need the most protection. Protect business owners’ paychecks with individual disability insurance along with a Business Overhead Expense (BOE) policy to protect the business. Only 5 percent of business owners have a Business Overhead Expense policy.
INTERNAL USE ONLY. Not for public distribution. 2012 NFP SCHOOL OF EXCELLENCE
INTERNAL USE ONLY. Not for public distribution.
NFP DI Capabilities & Resources
Multi Life DI Sales Center Customizable Marketing
Material Income Analysis Tools Request for Proposal
System Uconnect for DI Impaired Risk Outlet High Limit DI Outlet
Existing Coverage Reviews
Underwriting Advocacy Claims Expertise Point of Sale Assistance Carrier and Product
Information Training & Education NFP DI Partnerships
INTERNAL USE ONLY. Not for public distribution.
The secret to selling Disability Insurance…
You need to ask.
INTERNAL USE ONLY. Not for public distribution. 2012 NFP SCHOOL OF EXCELLENCE